{"url_path":"/sec/ecxj/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-09-11","source_url":"https://www.sec.gov/Archives/edgar/data/1823635/0001493152-26-042301-index.html","accession_number":"0001493152-26-042301","cik":"0001823635","ticker":"ECXJ","issuer_name":"CXJ GROUP CO., Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1823635/0001493152-26-042301-index.html","primary_entity_key":"0001823635","primary_entity_name":"CXJ GROUP CO., Ltd"},"word_count":1263,"has_tables":true,"body_markdown":"**Item\n7. Management’s Discussion and Analysis of Financial Condition and Results of Operations**\n\n \n\n*The\nfollowing discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in\nthis Annual Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual\nresults could differ materially from those discussed in the forward- looking statements. Factors that could cause or contribute to such\ndifferences include, but are not limited to those discussed below and elsewhere in this Report. Our audited financial statements are\nstated in U.S. Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.*\n\n \n\n**Company\nOverview**\n\n \n\nCXJ\nGroup Co., Limited (the “Company” or “ECXJ”), was incorporated in the State of Nevada on August 20, 1998.\n\n \n\nOur\nbusiness mainly divided into two sectors, namely sales of automotive products and management fee on our brand name “Chejiangling\n/ Teenage Hero Car”. Through various acquisitions of high-quality upstream and downstream companies in the industry, the Company\ncreates a complete industrial chain to reduce costs and enhance competitiveness.\n\n \n\nDuring\nthe year 2026 and 2025, the Company conducted its business in generally two revenue streams: Brand name management fees and sales of\nautomotive products.\n\n \n\n46\n\n \n\n \n\n**Results\nof Operations**\n\n \n\n  \nYear Ended May 31,  \nYear to Year Comparison \n\n  \n**2026**  \n**2025**  \n**Increase/ (Decrease)** \n\n  \n$  \n$  \n$ \n\nRevenue \n 531,606  \n 458,632  \n 72,974 \n\nCost of Goods Sold \n (175,396) \n (85,975) \n (89,421)\n\nGross Profit \n 356,210  \n 372,657  \n (16,447)\n\nOperating Expenses \n (656,758) \n (2,621,723) \n (1,964,965)\n\nOther Income/(Expense) \n 299,870  \n (508) \n 300,378 \n\nInterest Income \n 16  \n 10  \n 6 \n\nProvision for Income Taxes \n (9,018) \n (34,461) \n 25,443 \n\nNet Loss Attributable to ECXJ \n (9,680) \n (2,284,025) \n 2,274,345 \n\n \n\n**Revenue**\n\n \n\nFor\nthe year ended May 31, 2026, the revenue is $531,606, an increase of $72,974 or 16%, as compared to that for the year ended May 31, 2025\nof $458,632. The increment is mainly due to the increase revenue of automotive products $198,308 and offset decrease of brand name management\nfees $125,334.\n\n \n\n**Cost\nof Revenue**\n\n \n\nFor\nthe year ended May 31, 2026, the cost of revenue is $175,396, an increase of $89,421 as compared to that of May 31, 2025 of $85,975.\nThe increment is mainly due to the increase in sales of motor oil & auto parts $55,405, fuel additive cleaner $25,457, exhaust gas\ncleaner $9,654 and offset decrease of others $1,095.\n\n \n\n**Gross\nProfit**\n\n \n\nGross\nprofit was $356,210 for the year ended May 31, 2026, a decrease of $16,447 or 4%, as compared to that of May 31, 2025 of $372,657. The\ndecrement primarily due to the change of product mix, decrease of brand name management fees $125,334 offset increase of motor oil &\nauto parts $21,890, introduction of new product fuel additive cleaners $62,296, increased sales of exhaust gas cleaners $23,890 and others\n$811.\n\n \n\n**Operating\nExpenses**\n\n \n\nOperating\nexpenses are $656,758 and $2,621,723 for the years ended May 31, 2026 and 2025 respectively, as compared that is a decrease of $1,964,965.\nThe decrease is mainly due to impairment of goodwill decreased by $1,742,577 was due to the goodwill was fully impaired in 2025, consultancy\nfee decreased by $314,974 was due to written off of prepayment consultancy fees in 2025, rental decreased by $8,343 was due to terminated\noffice leasing of Longkou CXJ, penalty decreased by $7,943 was due to late payment of US corporation tax in 2025, stock loss decreased\nby $3,662 due to disposal of obsolete stock, promotion $2,588, travelling $2,327, others $2,222 and offset increased impairment loss\nof other receivable $38,562, payroll costs increased by $27,958 due to pay commission to sales staff, sales commission increased by $26,637\nwas due to pay sales commission to agents, inventory written-down increased by $16,721 due to written-down of slow-movement and obsoleted\nstock, transportation cost increased by $2,884 due to increased sales of automotive products, office expenses $2,256, entertainment $2,379,\nR&D expenses $2,274.\n\n \n\n47\n\n \n\n \n\n**Other\nIncome/Expenses**\n\n \n\nOther\nincome is $299,870 for the year ended May 31, 2026, an increase of $300,378, as compared to that of May 31, 2025 of other expenses $508.\nThe increase is mainly due to project called off and written off of accrual legal fee $300,000.\n\n \n\n**Net\nLoss**\n\n \n\nNet\nloss of $9,680 and $2,284,025 for the year ended May 31, 2026 and 2025 respectively, that is a decrease of net loss of $2,274,345, primarily\ndue to the above changes of revenues and expenses.\n\n \n\n**Liquidity\nand Capital Resources**\n\n \n\n**Working\nCapital**\n\n \n\n  \nYear Ended May 31,  \nYear to Year Comparison \n\n  \n2026  \n2025  \n\n**Increase/\n(Decrease)**\n \n\n  \n$  \n$  \n$ \n\n  \n    \n    \n   \n\nTotal Current Assets \n 292,846  \n 284,303  \n 8,543 \n\nTotal Current Liabilities \n 1,941,607  \n 1,855,286  \n 86,321 \n\nWorking Capital (Deficit) \n (1,648,761) \n (1,570,983) \n (77,778)\n\n \n\nAs\nof May 31, 2026 we had a working capital deficit of $1,648,761, representing an increase in the working capital deficit of $77,778, compared\nto a working capital deficit of $1,570,983 as of May 31, 2025. The increase in the working capital deficit was primarily attributable\nto an increase in total current liabilities of $86,321, partially offset by an increase in total current assets of $8,543.\n\n \n\nThe\nincrease in total current assets of $8,543 was mainly attributable to increases in cash and cash equivalents of $62,015, amounts due\nfrom related parties of $47,018, and accounts receivable of $184, partially offset by decreases in prepayments of $31,549, deposits and\nother receivables of $38,237, and inventories of $30,888.\n\n \n\nThe\nincrease in total current liabilities of $86,321 was mainly attributable to increases in contract liabilities of $475,297, amounts due\nto related parties of $23,644, and operating lease liabilities of $9,668, partially offset by decreases in accrued expenses and other\npayables of $401,052 and accounts payable of $21,236.\n\n \n\n**Cash\nFlows**\n\n \n\n  \nYear Ended May 31,  \nYear to Year Comparison \n\n  \n2026  \n2025  \n\n**Increase/\n(Decrease)**\n \n\n  \n$  \n$  \n$ \n\nCash Flows Provided By/(Used In) Operating Activities \n 76,483  \n (418,525) \n 495,008 \n\nCash Flows Used In Investing Activities \n -  \n -  \n - \n\nCash Flows (Used In)/Provided By Financing Activities. \n (17,321) \n 423,172  \n (440,493)\n\nEffects On Change In Foreign Exchange Rate \n 2,853  \n 2,869  \n (16)\n\nNet Change In Cash During The Year \n 62,015  \n 7,516  \n 54,499 \n\n** **\n\n**Cash\nFlow from Operating Activities**\n\n \n\nAs\nof May 31, 2026 cash flows provided by operating activities is $76,483, an increase of cash flow $495,008, as compared to cash flow used\nin operating activities $418,525 for the year ended May 31, 2025. The increase in cash flow is mainly due to net loss reduced by $2,274,345,\nincreased of impairment loss of other receivable $38,562, increased inventory written-down $16,721, increased inventories $25,412, increased\ncontract liabilities $438,830, increased accrued liabilities, increased deposit received and other payables $11,333, increased operating\nlease liabilities $25,712, and offset decrease of depreciation $725, decreased impairment of goodwill $1,742,577, decreased amortization\nof right-of-used assets $23,687, decreased written off of accrual legal fee $300,000, decreased accounts receivable $56,491, decreased\nprepayment, deposits and other receivables $198,407 and decreased accounts payable $14,020.\n\n \n\n48\n\n \n\n \n\n**Cash\nFlow from Investing Activities**\n\n \n\nNo\ninvesting activities during the year ended May 31, 2026 and 2025 respectively.\n\n \n\n**Cash\nFlow from Financing Activities**\n\n \n\nCash\nflow used in financing activities is $17,321 for the year ended May 31, 2026, compared to cash flow provided by financing activities\n$423,172 for the year ended May 31, 2025, reflecting a decrease cash flow of $440,493. The decrease was mainly due to decrease in proceeds\nfrom share issuance $369,728, increased of advance to related parties $18,374 and decreased of advances from directors $52,391.\n\n \n\n**Critical\nAccounting Policy and Estimates**\n\n \n\nThere\nare no critical accounting policies and estimates.\n\n \n\n**Off-Balance\nSheet Arrangements**\n\n \n\nWe\ndo not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial\ncondition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources\nthat is material to investors."}